Arguing without moving

Doesn’t it sometimes seem like two arguers are actually saying the same thing in slightly different ways? The devil’s in the semantics, or something, and a three-headed book review by Jonathan Derbyshire in the Guardian seems uncannily to be presenting a classic case applied to -what else? – economic man.

Here’s a bit about Tim Harford’s approach in “The Logic of Life”:

Yet for all the demotic breeziness of their style, both writers have a serious purpose. In Harford’s case, it is to defend a version of rational choice theory, which tries to explain human behaviour in terms of the maximisation of individual preferences or “utility”. On this model, which Harford thinks applies more or less universally, human beings respond to trade-offs or incentives: “When the costs and benefits of something change, people change their behaviour.” The important point for Harford is that those costs needn’t be financial…

Proponents of rational choice theory say that to act in accordance with the cost-benefit principle is to behave “rationally” – in a distinctive (and drastically circumscribed) sense of the word. And Harford’s contention is that we’re much more rational than we’re inclined to think. There’s a “rational explanation”, it seems, for more or less everything: for the shortage of eligible men in New York City, for instance, or for the evolved biological preferences of men and women.

We’re again in a world where it’s impossible to know exactly what drives people to make decisions, but where we can speculate that there are reasons for this or that decision, and speculate on what those reasons might be. But then here’s this, in discussion of Robert Frank’s “The Economic Naturalist”:

One problem with this approach is that it seems to apply better to an ideal creature called Homo economicus, whose preferences are perfectly consistent, than it does to flesh-and-blood human beings… Homo economicus would never change his preference for a roast beef sandwich over chicken salad just because the waitress remembers they’ve also got tuna on the menu.

This is a reference to a classic “behavioral” result; but, then again, says who? It’s of course possible to rationalize anything, as the behavioral school well knows when it invariably goes on to try to write down a model of a decision maker who would display these or other preferences. Aren’t we still in a Harford world, where we can identify a potential justification for any superficially weird-looking decision? I don’t see any difference between these “behavioral” results and this:

Frank’s book, meanwhile, is based on an assignment he gave to students taking his introductory course in economics at Cornell University. The students were asked to pose and answer a question about observed events or behaviour, and what they came up with certainly wasn’t the staple fare of Economics 101: why did kamikaze pilots wear helmets, they asked. Why is coyness often considered an attractive attribute? Why do women endure the discomfort of high heels?

All these phenomena obey what Frank calls “economic logic”, the fundamental law of which is the cost-benefit principle. This says that an action ought to be taken only when the extra benefit that accrues from taking it outweighs the extra cost. So when a woman decides to squeeze her feet into a pair of stilettos, for example, she has weighed the benefit of being “more likely to attract favourable notice”, as Frank somewhat coyly puts it, against the costs of discomfort.

Finally we get Stephen Marglin’s “The Dismal Science” (uh oh):

Marglin argues that to think about people as always rationally calculating their self-interest is at odds with the way non-economists think about people… And you don’t have to agree with Marglin that the way of life of the Amish people of Pennsylvania is the best counter-example to that to think there’s something drastically wrong with it.

That kind of reasoning is an F. First of all, self-interest does not equal concern only for my own material outcome: I can, like, perhaps, the Amish people appropriated as an example, be self-interestedly concerned with my peers. I absolutely cannot believe that anyone finds it difficult to fit the behavior of someone who, for example, donates to charity into a utilitarian model of the kind economists use every day. Yet these are the examples we come up with to try to “disprove” the “rationality” of “economic man”?

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